-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, HHK9tkGgSoOKiVqD7DvoMzcem0+8bUmcQcfmT4zCQrFWwJdoZo95OY8KyRjV17zk 2HeE/HvyXDMs7o98q03MGA== 0001047469-98-037717.txt : 19981021 0001047469-98-037717.hdr.sgml : 19981021 ACCESSION NUMBER: 0001047469-98-037717 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19981020 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19981020 SROS: NYSE SROS: PCX FILER: COMPANY DATA: COMPANY CONFORMED NAME: WELLS FARGO & CO CENTRAL INDEX KEY: 0000105598 STANDARD INDUSTRIAL CLASSIFICATION: NATIONAL COMMERCIAL BANKS [6021] IRS NUMBER: 132553920 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-06214 FILM NUMBER: 98728078 BUSINESS ADDRESS: STREET 1: 420 MONTGOMERY ST CITY: SAN FRANCISCO STATE: CA ZIP: 94163 BUSINESS PHONE: 8004114932 MAIL ADDRESS: STREET 1: 343 SANSOME ST 3RD FL STREET 2: WELLS FARGO BANK CITY: SAN FRANCISCO STATE: CA ZIP: 94163 8-K 1 8-K UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (date of earliest event reported): October 20, 1998 WELLS FARGO & COMPANY (Exact name of registrant as specified in its charter) Delaware 1-6214 No. 13-2553920 (State or other jurisdiction (Commission File (IRS Employer of incorporation) Number) Identification No.) 420 Montgomery Street, San Francisco, California 94163 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: 1-800-411-4932 Not applicable (Former name or former address, if changed since last report) Item 5: OTHER EVENTS Attached hereto as Exhibit 99.1 is a Press Release announcing Wells Fargo & Company's financial results for the quarter ended September 30, 1998. Item 7: FINANCIAL STATEMENTS AND EXHIBITS (c) Exhibits 27 Financial Data Schedule 99.1 Copy of the Press Release announcing Wells Fargo & Company's financial results for the quarter ended September 30, 1998 99.2 Wells Fargo and Company's consolidated statement of cash flows for the nine months ended September 30, 1998 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on October 20, 1998. WELLS FARGO & COMPANY By: FRANK A. MOESLEIN --------------------------------------- Frank A. Moeslein Executive Vice President and Controller EX-27 2 EXHIBIT 27
9 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE 8-K DATED OCTOBER 20, 1998 FOR THE PERIOD ENDED SEPTEMBER 30, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL INFORMATION. 1,000,000 9-MOS DEC-31-1998 JAN-01-1998 SEP-30-1998 6,538 0 1,080 0 8,242 0 0 64,374 1,833 92,815 69,769 1,870 2,760 5,113 0 275 426 12,499 92,815 4,524 403 101 5,028 1,219 1,602 3,426 510 41 3,277 1,836 999 0 0 999 11.55 11.44 6.14 506 0 0 0 1,828 713 208 1,833 0 0 0 Amount represents basic earnings per common share pursuant to FAS 128.
EX-99.1 3 EXHIBIT 99.1 EXHIBIT 99.1 Kim Kellogg 415-396-3606 FOR IMMEDIATE RELEASE - --------------------- Tues., October 20, 1998 WELLS FARGO REPORTS INCREASE IN THIRD QUARTER EARNINGS EARNINGS PER SHARE OF $4.03 VS. $3.91 IN SECOND QUARTER 1998 CASH EARNINGS PER SHARE OF $5.31 VS. $5.21 IN SECOND QUARTER 1998 SAN FRANCISCO -- Wells Fargo & Co. (NYSE:WFC) today reported earnings per share for the quarter of $4.03, compared with $3.91 for the second quarter of 1998 and $3.26 for the third quarter of 1997. Return on average assets (ROA) was 1.49 percent and return on average common equity (ROE) was 10.70 percent for the quarter, compared with 1.45 percent and 10.66 percent, respectively, for the second quarter of 1998. In the year-ago period, ROA was 1.18 percent and ROE was 8.94 percent. Cash earnings per share were $5.31 for the third quarter of 1998, compared with $5.21 for the second quarter of 1998 and $4.57 for the third quarter of 1997. Cash ROA was 2.14 percent and cash ROE was 35.64 percent for the third quarter of 1998, compared with 2.11 percent and 37.78 percent, respectively, for the second quarter of 1998. In the year-ago period, cash ROA was 1.81 percent and cash ROE was 35.44 percent. Cash earnings are earnings before the amortization of goodwill and nonqualifying core deposit intangible. "We are pleased with our results and the strength of our numbers this quarter," said Chairman Paul Hazen. "This final stand-alone performance demonstrates the soundness of our franchise as we enter the merger with Norwest." Net income was $347 million for the third quarter of 1998, compared with $337 million for the second quarter of 1998 and $290 million for the third quarter of 1997. Net interest income on a taxable-equivalent basis was $1.151 billion in the third quarter of 1998, compared with $1.154 billion in the second quarter of 1998 and $1.132 billion in the third quarter of 1997. The Company's net interest margin for the third quarter of 1998 was 6.18 percent, compared with 6.22 percent in the second quarter of 1998 and 5.94 percent in the third quarter of 1997. The increase from a year ago was mostly due to an improvement in the funding mix. -more- 2/WF Earnings Noninterest income (NII) in the third quarter of 1998 was $737 million, compared with $735 million in the second quarter of 1998 and $677 million in the third quarter of 1997. A significant portion of the increase from a year ago was due to service charges on deposit accounts and higher fees and commissions income. Noninterest expense (NIE) in the third quarter of 1998 was $1.088 billion, compared with $1.097 billion in the second quarter of 1998 and $1.087 billion in the third quarter of 1997. The loan loss provision was $160 million for the third quarter of 1998, compared with $170 million for the second quarter of 1998 and $175 million for the third quarter of 1997. Net charge-offs in the third quarter of 1998 totaled $162 million, or 1.01 percent of average loans (annualized). In the second quarter of 1998, net charge-offs totaled $165 million, or 1.02 percent of average loans (annualized). In the third quarter of 1997, net charge-offs totaled $202 million, or 1.25 percent of average loans (annualized). The largest category of net charge-offs was credit card loans for all periods presented. At September 30, 1998, the allowance for loan losses of $1.833 billion equaled 2.85 percent of total loans, compared with 2.85 percent at June 30, 1998 and 2.80 percent at September 30, 1997. Total nonaccrual and restructured loans were $506 million at September 30, 1998, compared with $517 million at June 30, 1998 and $574 million at September 30, 1997. Foreclosed assets were $130 million at September 30, 1998, compared with $127 million at June 30, 1998 and $196 million at September 30, 1997. At September 30, 1998, the Company's preliminary risk-based capital ratios were 12.25 percent for total risk-based capital and 8.50 percent for Tier 1 risk-based capital, exceeding the minimum regulatory guidelines of 8 percent and 4 percent, respectively. The preliminary leverage ratio at September 30, 1998 was 8.05 percent. The ratio of common equity to total assets at September 30, 1998 was 13.93 percent. - ---------------------- The following appears in accordance with the Securities Litigation Reform Act: This press release includes forward-looking statements that involve inherent risks and uncertainties. A number of important factors could cause actual results to differ materially from those in the forward-looking statements. Those factors include fluctuations in interest rates, inflation, government regulations, customer disintermediation, technology changes (including the Year 2000 issue) and economic conditions and competition in the geographic and business areas in which the Company conducts its operations. ### Founded in 1852, Wells Fargo & Company has operations in Arizona, California, Colorado, Idaho, Nevada, New Mexico, Oregon, Texas, Utah and Washington. VISIT WELLS FARGO ON THE WORLD WIDE WEB AT HTTP://WWW.WELLSFARGO.COM - 3 - Wells Earnings Wells Fargo & Company and Subsidiaries SUMMARY FINANCIAL DATA--NEWS RELEASE
- --------------------------------------------------------------------------------------------------------------------------------- % Change Quarter ended Sept. 30, from Nine months ended ------------------------------ ------------------ -------------------- SEPT. 30, June 30, Sept. 30, June 30, Sept. 30, SEPT. 30, Sept. 30, % (in millions) 1998 1998 1997 1998 1997 1998 1997 Change - --------------------------------------------------------------------------------------------------------------------------------- FOR THE PERIOD Net income $ 347 $ 337 $ 290 3 % 20 % $ 999 $ 857 17 % Net income applicable to common stock 343 333 285 3 20 986 836 18 Earnings per common share $ 4.03 $ 3.91 $ 3.26 3 24 $ 11.55 $ 9.38 23 Diluted earnings per common share 3.99 3.87 3.23 3 24 11.44 9.28 23 Dividends declared per common share 1.30 1.30 1.30 -- -- 3.90 3.90 -- Average common shares outstanding 85.2 85.2 87.5 -- (3) 85.4 89.1 (4) Diluted average common shares outstanding 85.9 86.1 88.4 -- (3) 86.2 90.1 (4) Profitability ratios (annualized) Net income to average total assets (ROA) 1.49 % 1.45 % 1.18 % 3 26 1.43 % 1.14 % 25 Net income applicable to common stock to average common stockholders' equity (ROE) 10.70 10.66 8.94 -- 20 10.48 8.62 22 Efficiency ratio (1) 57.8 % 58.2 % 60.2 % (1) (4) 58.3 % 62.9 % (7) Average loans $63,638 $64,397 $63,865 (1) -- $64,362 $ 64,653 -- Average assets 92,335 93,148 97,032 (1) (5) 93,570 100,703 (7) Average core deposits 69,608 69,807 70,744 -- (2) 69,756 73,937 (6) Net interest margin 6.18 % 6.22 % 5.94 % (1) 4 6.14 % 6.00 % 2 NET INCOME AND RATIOS EXCLUDING GOODWILL AND NONQUALIFYING CORE DEPOSIT INTANGIBLE AMORTIZATION AND BALANCES ("CASH" OR "TANGIBLE") (2) Net income applicable to common stock $ 452 $ 444 $ 400 2 13 $ 1,319 $ 1,181 12 Earnings per common share 5.31 5.21 4.57 2 16 15.44 13.25 17 Diluted earnings per common share 5.26 5.15 4.52 2 16 15.30 13.11 17 ROA 2.14 % 2.11 % 1.81 % 1 18 2.08 1.74 % 20 ROE 35.64 37.78 35.44 (6) 1 36.92 33.83 9 Efficiency ratio 50.9 51.2 52.6 (1) (3) 51.3 55.4 (7) AT PERIOD END Securities available for sale $ 8,242 $ 8,449 $10,737 (2) (23) $ 8,242 $ 10,737 (23) Loans 64,374 64,320 65,104 -- (1) 64,374 65,104 (1) Allowance for loan losses 1,833 1,835 1,823 -- 1 1,833 1,823 1 Goodwill 6,757 6,837 7,149 (1) (5) 6,757 7,149 (5) Assets 92,815 93,200 97,655 -- (5) 92,815 97,655 (5) Core deposits 69,491 70,209 70,580 (1) (2) 69,491 70,580 (2) Common stockholders' equity 12,925 12,675 12,645 2 2 12,925 12,645 2 Stockholders' equity 13,200 12,950 12,920 2 2 13,200 12,920 2 Capital ratios Common stockholders' equity to assets 13.93 % 13.60 % 12.95 % 2 8 13.93 12.95 % 8 Stockholders' equity to assets 14.22 13.90 13.23 2 7 14.22 13.23 7 Risk-based capital (3) Tier 1 capital 8.50 8.08 7.53 5 13 8.50 7.53 13 Total capital 12.25 11.94 11.47 3 7 12.25 11.47 7 Leverage (3) 8.05 7.53 6.76 7 19 8.05 6.76 19 Book value per common share $151.63 $148.96 $145.72 2 4 $151.63 $ 145.72 4 Staff (active, full-time equivalent) 31,600 31,620 32,663 -- (3) 31,600 32,663 (3) COMMON STOCK PRICE High $392.94 $387.25 $279.88 1 40 $392.94 $ 319.25 23 Low 281.88 329.13 250.13 (14) 13 281.88 246.00 15 Period end 355.00 369.00 275.00 (4) 29 355.00 275.00 29 - ---------------------------------------------------------------------------------------------------------------------------------
(1) The efficiency ratio is defined as noninterest expense divided by the total of net interest income and noninterest income. (2) Nonqualifying core deposit intangible (CDI) amortization and average balance excluded from these calculations are, with the exception of the efficiency ratio, net of applicable taxes. The after-tax amounts for the amortization and average balance of nonqualifying CDI were $29 million and $884 million, respectively, for the quarter ended September 30, 1998 and $90 million and $913 million, respectively, for the nine months ended September 30, 1998. Goodwill amortization and average balance (which are not tax effected) were $80 million and $6,797 million, respectively, for the quarter ended September 30, 1998 and $242 million and $6,896 million, respectively, for the nine months ended September 30, 1998. (3) The September 30, 1998 ratios are preliminary. -4- Wells Fargo & Company and Subsidiaries CONSOLIDATED STATEMENT OF INCOME
------------------------------------------------------------------------------------------------------------------ Quarter Nine months ended Sept. 30, % ended Sept. 30, % ---------------- ---------------- (in millions) 1998 1997 Change 1998 1997 Change ------------------------------------------------------------------------------------------------------------------ INTEREST INCOME Federal funds sold and securities purchased (1) under resale agreements $ 16 $ 3 433 % $ 32 $ 15 113 % (2) Investment securities 128 175 (27) 403 573 (30) (3) Loans 1,497 1,513 (1) 4,524 4,570 (1) (4) Other 26 16 63 69 39 77 ------ ------ ------ ------ (5) Total interest income 1,667 1,707 (2) 5,028 5,197 (3) ------ ------ ------ ------ INTEREST EXPENSE (6) Deposits 407 430 (5) 1,219 1,280 (5) Federal funds purchased and securities sold (7) under repurchase agreements 16 44 (64) 76 109 (30) (8) Commercial paper and other short-term borrowings 4 5 (20) 14 12 17 (9) Senior and subordinated debt 68 75 (9) 217 234 (7) Guaranteed preferred beneficial interests in (10) Company's subordinated debentures 25 25 -- 76 75 1 ------ ------ ------ ------ (11) Total interest expense 520 579 (10) 1,602 1,710 (6) ------ ------ ------ ------ (12) NET INTEREST INCOME 1,147 1,128 2 3,426 3,487 (2) (13) Provision for loan losses 160 175 (9) 510 420 21 ------ ------ ------ ------ Net interest income after (14) provision for loan losses 987 953 4 2,916 3,067 (5) ------ ------ ------ ------ NONINTEREST INCOME (15) Fees and commissions 274 246 11 801 694 15 (16) Service charges on deposit accounts 235 214 10 665 649 2 (17) Trust and investment services income 115 117 (2) 343 338 1 (18) Investment securities gains (losses) 18 (1) -- 41 6 583 (19) Other 95 101 (6) 347 309 12 ------ ------ ------ ------ (20) Total noninterest income 737 677 9 2,197 1,996 10 ------ ------ ------ ------ NONINTEREST EXPENSE (21) Salaries 299 308 (3) 907 964 (6) (22) Incentive compensation 61 54 13 175 143 22 (23) Employee benefits 73 80 (9) 244 256 (5) (24) Equipment 96 97 (1) 294 289 2 (25) Net occupancy 96 96 -- 295 292 1 (26) Goodwill 80 81 (1) 242 245 (1) (27) Core deposit intangible 55 64 (14) 172 193 (11) (28) Operating losses 23 40 (43) 79 262 (70) (29) Other 305 267 14 869 806 8 ------ ------ ------ ------ (30) Total noninterest expense 1,088 1,087 -- 3,277 3,450 (5) ------ ------ ------ ------ INCOME BEFORE INCOME TAX (31) EXPENSE 636 543 17 1,836 1,613 14 (32) Income tax expense 289 253 14 837 756 11 ------ ------ ------ ------ (33) NET INCOME $ 347 $ 290 20 % $ 999 $ 857 17 % ------ ------ --- ------ ------ --- ------ ------ --- ------ ------ --- NET INCOME APPLICABLE TO (34) COMMON STOCK $ 343 $ 285 20 % $ 986 $ 836 18 % ------ ------ --- ------ ------ --- ------ ------ --- ------ ------ --- (35) EARNINGS PER COMMON SHARE $ 4.03 $ 3.26 24 % $11.55 $ 9.38 23 % ------ ------ --- ------ ------ --- ------ ------ --- ------ ------ --- (36) DILUTED EARNINGS PER COMMON SHARE $ 3.99 $ 3.23 24 % $11.44 $ 9.28 23 % ------ ------ --- ------ ------ --- ------ ------ --- ------ ------ --- DIVIDENDS DECLARED (37) PER COMMON SHARE $ 1.30 $ 1.30 -- % $ 3.90 $ 3.90 -- % ------ ------ --- ------ ------ --- ------ ------ --- ------ ------ --- (38) Average common shares outstanding 85.2 87.5 (3)% 85.4 89.1 (4)% ------ ------ --- ------ ------ --- ------ ------ --- ------ ------ --- (39) Diluted average common shares outstanding 85.9 88.4 (3)% 86.2 90.1 (4)% ------ ------ --- ------ ------ --- ------ ------ --- ------ ------ --- ------------------------------------------------------------------------------------------------------------------
- 5 - Wells Fargo & Company and Subsidiaries CONSOLIDATED BALANCE SHEET
-------------------------------------------------------------------------------------------------------------------------- % Change Sept. 30, 1998 from ------------------- SEPT. 30, Dec. 31, Sept. 30, Dec. 31, Sept. 30, (in millions) 1998 1997 1997 1997 1997 -------------------------------------------------------------------------------------------------------------------------- ASSETS (1) Cash and due from banks $ 6,538 $ 8,169 $ 7,823 (20)% (16)% Federal funds sold and securities (2) purchased under resale agreements 1,080 82 188 -- 474 (3) Securities available for sale 8,242 9,888 10,737 (17) (23) (4) Loans 64,374 65,734 65,104 (2) (1) (5) Allowance for loan losses 1,833 1,828 1,823 -- 1 ------- ------- ------- (6) Net loans 62,541 63,906 63,281 (2) (1) ------- ------- ------- (7) Due from customers on acceptances 103 98 104 5 (1) (8) Accrued interest receivable 502 507 537 (1) (7) (9) Premises and equipment, net 1,913 2,117 2,173 (10) (12) (10) Core deposit intangible 1,537 1,709 1,771 (10) (13) (11) Goodwill 6,757 7,031 7,149 (4) (5) (12) Other assets 3,602 3,949 3,892 (9) (7) ------- ------- ------- (13) Total assets $92,815 $97,456 $97,655 (5) (5)% ------- ------- ------- --- --- ------- ------- ------- --- --- LIABILITIES (14) Noninterest-bearing deposits $22,542 $23,953 $23,005 (6)% (2)% (15) Interest-bearing deposits 47,227 48,246 47,917 (2) (1) ------- ------- ------- (16) Total deposits 69,769 72,199 70,922 (3) (2) Federal funds purchased and securities (17) sold under repurchase agreements 1,419 3,576 4,268 (60) (67) (18) Commercial paper and other short-term borrowings 451 249 458 81 (2) (19) Acceptances outstanding 103 98 104 5 (1) (20) Accrued interest payable 241 175 245 38 (2) (21) Other liabilities 2,519 2,403 2,574 5 (2) (22) Senior debt 1,284 1,983 2,280 (35) (44) (23) Subordinated debt 2,530 2,585 2,585 (2) (2) Guaranteed preferred beneficial interests in (24) Company's subordinated debentures 1,299 1,299 1,299 -- -- STOCKHOLDERS' EQUITY (25) Preferred stock 275 275 275 -- -- Common stock - $5 par value, authorized 150,000,000 shares; issued and outstanding 85,237,292 shares, (26) 86,152,779 shares and 86,780,522 shares 426 431 434 (1) (2) (27) Additional paid-in capital 8,375 8,712 8,925 (4) (6) (28) Retained earnings 4,069 3,416 3,235 19 26 (29) Cumulative other comprehensive income 55 55 51 -- 8 ------- ------- ------- (30) Total stockholders' equity 13,200 12,889 12,920 2 2 ------- ------- ------- (31) Total liabilities and stockholders' equity $92,815 $97,456 $97,655 (5)% (5)% ------- ------- ------- --- --- ------- ------- ------- --- --- --------------------------------------------------------------------------------------------------------------------------
- 6 - Wells Fargo & Company and Subsidiaries CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
- ----------------------------------------------------------------------------------------------- Nine months ended Sept. 30, -------------------------- (in millions) 1998 1997 - ----------------------------------------------------------------------------------------------- BALANCE, BEGINNING OF PERIOD $12,889 $14,112 Net income 999 857 Other comprehensive income (loss), net of tax: Change in foreign currency translation adjustments -- 4 Change in investment securities valuation allowance -- 28 Common stock issued under employee benefit and dividend reinvestment plans 87 67 Preferred stock redeemed -- (325) Common stock repurchased (429) (1,452) Preferred stock dividends (13) (21) Common stock dividends (333) (350) ------- ------- BALANCE, END OF PERIOD $13,200 $12,920 ------- ------- ------- ------- - -----------------------------------------------------------------------------------------------
LOANS
- ----------------------------------------------------------------------------------------------- SEPT. 30, Dec. 31, Sept. 30, (in millions) 1998 1997 1997 - ----------------------------------------------------------------------------------------------- Commercial $21,705 $20,144 $19,512 Real estate 1-4 family first mortgage 7,384 8,869 9,311 Other real estate mortgage 11,715 12,186 11,614 Real estate construction 2,475 2,320 2,351 Consumer: Real estate 1-4 family junior lien mortgage 5,375 5,865 5,931 Credit card 4,049 5,039 5,020 Other revolving credit and monthly payment 6,610 7,185 7,513 ------- ------- ------- Total consumer 16,034 18,089 18,464 Lease financing 4,919 4,047 3,754 Foreign 142 79 98 ------- ------- ------- Total loans $64,374 $65,734 $65,104 ------- ------- ------- ------- ------- ------- - -----------------------------------------------------------------------------------------------
- 7 - Wells Fargo & Company and Subsidiaries CHANGES IN THE ALLOWANCE FOR LOAN LOSSES
- --------------------------------------------------------------------------------------------------------------------------------- Quarter ended Nine months ended --------------------------------------- ------------------------ SEPT. 30, June 30, Sept. 30, SEPT. 30, Sept. 30, (in millions) 1998 1998 1997 1998 1997 - --------------------------------------------------------------------------------------------------------------------------------- BALANCE, BEGINNING OF PERIOD $1,835 $1,830 $1,850 $1,828 $2,018 Provision for loan losses 160 170 175 510 420 Loan charge-offs: Commercial (50) (46) (69) (145) (198) Real estate 1-4 family first mortgage (3) (4) (5) (11) (15) Other real estate mortgage (18) (10) (2) (29) (13) Real estate construction -- (2) -- (2) (3) Consumer: Real estate 1-4 family junior lien mortgage (2) (2) (6) (8) (18) Credit card (105) (117) (124) (340) (372) Other revolving credit and monthly payment (45) (48) (55) (147) (168) ------ ------ ------ ------ ------ Total consumer (152) (167) (185) (495) (558) Lease financing (9) (11) (10) (31) (29) ------ ------ ------ ------ ------ Total loan charge-offs (232) (240) (271) (713) (816) ------ ------ ------ ------ ------ Loan recoveries: Commercial 12 13 21 44 53 Real estate 1-4 family first mortgage 2 1 1 5 3 Other real estate mortgage 26 28 13 62 42 Real estate construction -- 1 1 2 3 Consumer: Real estate 1-4 family junior lien mortgage 1 1 2 4 6 Credit card 11 12 12 34 34 Other revolving credit and monthly payment 15 17 17 48 51 ------ ------ ------ ------ ------ Total consumer 27 30 31 86 91 Lease financing 3 2 2 9 9 ------ ------ ------ ------ ------ Total loan recoveries 70 75 69 208 201 ------ ------ ------ ------ ------ Total net loan charge-offs (162) (165) (202) (505) (615) ------ ------ ------ ------ ------ BALANCE, END OF PERIOD $1,833 $1,835 $1,823 $1,833 $1,823 ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ Total net loan charge-offs as a percentage of average loans (annualized) 1.01 % 1.02 % 1.25 % 1.05 % 1.27 % ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ Allowance as a percentage of total loans 2.85 % 2.85 % 2.80 % 2.85 % 2.80 % ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ - ---------------------------------------------------------------------------------------------------------------------------------
- 8 - Wells Fargo & Company and Subsidiaries NONACCRUAL AND RESTRUCTURED LOANS AND OTHER ASSETS
- ------------------------------------------------------------------------------------------ SEPT. 30, Dec. 31, Sept. 30, (in millions) 1998 1997 1997 - ------------------------------------------------------------------------------------------ Nonaccrual loans: Commercial $180 $155 $172 Real estate 1-4 family first mortgage 73 104 100 Other real estate mortgage 205 228 258 Real estate construction 30 23 18 Consumer: Real estate 1-4 family junior lien mortgage 15 17 16 Other revolving credit and monthly payment 3 1 1 ---- ---- ---- Total nonaccrual loans 506 528 565 Restructured loans -- 9 9 ---- ---- ---- Nonaccrual and restructured loans 506 537 574 As a percentage of total loans .8 % .8 % .9 % Foreclosed assets 130 158 196 Real estate investments (1) 2 4 4 ---- ---- ---- Total nonaccrual and restructured loans and other assets $638 $699 $774 ---- ---- ---- ---- ---- ---- - ------------------------------------------------------------------------------------------
(1) Represents the amount of real estate investments (contingent interest loans accounted for as investments) that would be classified as nonaccrual if such assets were loans. Real estate investments totaled $133 million, $172 million and $170 million at September 30, 1998, December 31, 1997 and September 30, 1997, respectively. - 9 - Wells Fargo & Company and Subsidiaries NONINTEREST INCOME
- ------------------------------------------------------------------------------------------------------------------------------ Quarter Nine months ended Sept. 30, % ended Sept. 30, % ---------------- ------------------- (in millions) 1998 1997 Change 1998 1997 Change - ------------------------------------------------------------------------------------------------------------------------------ Fees and commissions: Credit card membership and other credit card fees $ 66 $ 62 6 % $ 195 $ 162 20 % ATM network fees 50 43 16 144 125 15 Charges and fees on loans 42 37 14 125 100 25 Debit and credit card merchant fees 27 25 8 74 72 3 Mutual fund and annuity sales fees 22 18 22 65 51 27 All other 67 61 10 198 184 8 ---- ---- ------ ------ Total fees and commissions 274 246 11 801 694 15 Service charges on deposit accounts 235 214 10 665 649 2 Trust and investment services income: Asset management and custody fees 62 64 (3) 187 186 1 Mutual fund management fees 47 47 -- 137 131 5 All other 6 6 -- 19 21 (10) ---- ---- ------ ------ Total trust and investment services income 115 117 (2) 343 338 1 Investment securities gains (losses) 18 (1) -- 41 6 583 Income from equity investments accounted for by the: Cost method 32 18 78 116 109 6 Equity method 12 11 9 43 42 2 Check printing charges 22 17 29 60 53 13 Gains on sales of loans 14 28 (50) 67 41 63 Gains (losses) from dispositions of operations 18 (1) -- 89 7 -- Losses on dispositions of premises and equipment (7) (10) (30) (58) (45) 29 All other 4 38 (89) 30 102 (71) ---- ---- ------ ------ Total $737 $677 9 % $2,197 $1,996 10 % ---- ---- --- ------ ------ --- ---- ---- --- ------ ------ --- - ------------------------------------------------------------------------------------------------------------------------------
NONINTEREST EXPENSE
- ------------------------------------------------------------------------------------------------------------------------------ Quarter Nine months ended Sept. 30, % ended Sept. 30, % ----------------- ------------------- (in millions) 1998 1997 Change 1998 1997 Change - ------------------------------------------------------------------------------------------------------------------------------ Salaries $ 299 $ 308 (3)% $ 907 $ 964 (6)% Incentive compensation 61 54 13 175 143 22 Employee benefits 73 80 (9) 244 256 (5) Equipment 96 97 (1) 294 289 2 Net occupancy 96 96 -- 295 292 1 Goodwill 80 81 (1) 242 245 (1) Core deposit intangible: Nonqualifying (1) 49 56 (13) 152 169 (10) Qualifying 6 8 (25) 20 24 (17) Operating losses 23 40 (43) 79 262 (70) Contract services 73 56 30 206 172 20 Telecommunications 34 35 (3) 98 108 (9) Security 22 22 -- 63 66 (5) Postage 17 19 (11) 55 64 (14) Outside professional services 24 20 20 72 56 29 Advertising and promotion 30 19 58 84 53 58 Stationery and supplies 14 19 (26) 40 56 (29) Travel and entertainment 18 15 20 51 44 16 Check printing 12 12 -- 36 42 (14) Outside data processing 21 11 91 51 37 38 Foreclosed assets (1) 1 -- (1) (2) (50) All other 41 38 8 114 110 4 ------ ------ ------ ------ Total $1,088 $1,087 -- % $3,277 $3,450 (5)% ------ ------ --- ------ ------ --- ------ ------ --- ------ ------ --- - ------------------------------------------------------------------------------------------------------------------------------
(1) Amortization of core deposit intangible acquired after February 1992 that is subtracted from stockholders' equity in computing regulatory capital for bank holding companies. - 10 - Wells Fargo & Company and Subsidiaries AVERAGE BALANCES, YIELDS AND RATES PAID (TAXABLE-EQUIVALENT BASIS) (1)
-------------------------------------------------------------------------------------------------------------------- Quarter ended September 30, ------------------------------------------------------------ 1998 1997 --------------------------- -------------------------- INTEREST Interest AVERAGE YIELDS/ INCOME/ Average Yields/ income/ (in millions) BALANCE RATES EXPENSE balance rates expense ------------------------------------------------------------------------------------------------------------------- EARNING ASSETS Federal funds sold and securities purchased (1) under resale agreements $ 1,152 5.64 % $ 16 $ 229 5.63 % $ 3 Securities available for sale (2): (2) U.S. Treasury securities 1,771 6.05 27 2,634 6.00 40 Securities of U.S. government agencies (3) and corporations 2,928 6.60 48 5,303 6.42 85 (4) Private collateralized mortgage obligations 2,832 6.62 47 2,737 6.68 46 (5) Other securities 553 6.84 8 330 6.41 4 ------- ------ -------- ------ (6) Total securities available for sale 8,084 6.50 130 11,004 6.38 175 Loans: (7) Commercial 20,965 8.89 469 18,283 9.11 419 (8) Real estate 1-4 family first mortgage 7,550 7.54 143 9,543 7.52 180 (9) Other real estate mortgage 11,509 9.67 281 11,421 9.35 269 (10) Real estate construction 2,534 9.43 60 2,304 10.90 63 Consumer: (11) Real estate 1-4 family junior lien mortgage 5,368 9.07 123 5,946 9.35 140 (12) Credit card 4,279 15.30 164 5,073 14.66 186 (13) Other revolving credit and monthly payment 6,606 9.45 156 7,638 9.26 178 ------- ------ -------- ------ (14) Total consumer 16,253 10.86 443 18,657 10.75 504 (15) Lease financing 4,684 8.58 100 3,533 8.99 79 (16) Foreign 143 7.37 3 124 6.88 2 ------- ------ -------- ------ (17) Total loans (3) 63,638 9.37 1,499 63,865 9.45 1,516 (18) Other 1,405 7.24 26 883 7.18 16 ------- ------ -------- ------ Total earning assets $74,279 8.96 1,671 $ 75,981 8.97 1,710 ------- ------ -------- ------ ------- -------- FUNDING SOURCES Deposits: (19) Interest-bearing checking $ 1,711 1.39 6 $ 1,736 1.45 6 (20) Market rate and other savings 30,356 2.69 206 31,098 2.64 207 (21) Savings certificates 15,082 5.05 192 15,602 5.17 203 (22) Other time deposits 205 4.74 2 253 4.83 3 (23) Deposits in foreign offices 55 3.95 1 731 5.48 10 ------- ------ -------- ------ (24) Total interest-bearing deposits 47,409 3.40 407 49,420 3.45 429 Federal funds purchased and securities sold (25) under repurchase agreements 1,186 5.33 16 3,211 5.48 44 (26)Commercial paper and other short-term borrowings 261 5.41 4 343 5.82 5 (27)Senior debt 1,487 6.17 23 1,770 6.47 29 (28)Subordinated debt 2,593 6.99 45 2,604 7.12 46 Guaranteed preferred beneficial interests in Company's (29) subordinated debentures 1,299 7.81 25 1,299 7.81 25 ------- ------ -------- ------ (30) Total interest-bearing liabilities 54,235 3.81 520 58,647 3.92 578 (31)Portion of noninterest-bearing funding sources 20,044 -- -- 17,334 -- -- ------- ------ -------- ------ (32) Total funding sources $74,279 2.78 520 $ 75,981 3.03 578 ------- ------ -------- ------ ------- -------- NET INTEREST MARGIN AND NET INTEREST INCOME ON (33) A TAXABLE-EQUIVALENT BASIS (4) 6.18 % $1,151 5.94 % $1,132 ---- ------ ---- ------ ---- ------ ---- ------ NONINTEREST-EARNING ASSETS (34)Cash and due from banks $ 6,384 $ 7,299 (35)Goodwill 6,797 7,190 (36)Other 4,875 6,562 ------- -------- Total noninterest-earning assets $18,056 $ 21,051 ------- -------- ------- -------- NONINTEREST-BEARING FUNDING SOURCES (37)Deposits $22,459 $ 22,308 (38)Other liabilities 2,649 3,135 (39)Preferred stockholders' equity 275 275 (40)Common stockholders' equity 12,717 12,667 Noninterest-bearing funding sources used to (41) fund earning assets (20,044) (17,334) ------- -------- (42) Net noninterest-bearing funding sources $18,056 $ 21,051 ------- -------- ------- -------- (43) TOTAL ASSETS $92,335 $ 97,032 ------- -------- ------- -------- -------------------------------------------------------------------------------------------------------------------
(1) The average prime rate of Wells Fargo Bank was 8.50% for the quarters ended September 30, 1998 and 1997. The average three-month London Interbank Offered Rate (LIBOR) was 5.62% and 5.73% for the same quarters, respectively. (2) Yields are based on amortized cost balances. The average amortized cost balances for securities available for sale totaled $7,971 million and $10,931 million for the quarters ended September 30, 1998 and 1997, respectively. (3) Nonaccrual loans and related income are included in their respective loan categories. (4) Includes taxable-equivalent adjustments that primarily relate to income on certain loans and securities that is exempt from federal and applicable state income taxes. The federal statutory tax rate was 35% for the quarters ended September 30, 1998 and 1997. - 11 - Wells Fargo & Company and Subsidiaries AVERAGE BALANCES, YIELDS AND RATES PAID (TAXABLE-EQUIVALENT BASIS) (1)
---------------------------------------------------------------------------------------------------------------- Nine months ended September 30, ------------------------------------------------------------ 1998 1997 --------------------------- -------------------------- INTEREST Interest AVERAGE YIELDS/ INCOME/ Average Yields/ income/ (in millions) BALANCE RATES EXPENSE balance rates expense ---------------------------------------------------------------------------------------------------------------- EARNING ASSETS Federal funds sold and securities purchased (1) under resale agreements $ 759 5.65 % $ 32 $ 351 5.58 % $ 15 Securities available for sale (2): (2) U.S. Treasury securities 2,105 6.09 95 2,745 6.03 124 Securities of U.S. government agencies (3) and corporations 3,413 6.60 167 5,972 6.43 287 (4) Private collateralized mortgage obligations 2,422 6.65 120 2,935 6.63 147 (5) Other securities 511 7.07 25 340 6.42 15 -------- ------ -------- ------ (6) Total securities available for sale 8,451 6.51 407 11,992 6.39 573 Loans: (7) Commercial 20,550 8.99 1,382 18,373 9.07 1,246 (8) Real estate 1-4 family first mortgage 8,109 7.50 456 9,899 7.49 555 (9) Other real estate mortgage 11,810 9.61 848 11,514 9.82 846 (10) Real estate construction 2,444 9.55 175 2,288 10.23 175 Consumer: (11) Real estate 1-4 family junior lien mortgage 5,521 9.32 385 6,049 9.34 423 (12) Credit card 4,554 15.19 519 5,188 14.39 560 (13) Other revolving credit and monthly payment 6,841 9.20 471 7,913 9.29 550 -------- ------ -------- ------ (14) Total consumer 16,916 10.85 1,375 19,150 10.69 1,533 (15) Lease financing 4,408 8.64 286 3,295 8.83 218 (16) Foreign 125 7.68 7 134 6.91 7 -------- ------ -------- ------ (17) Total loans (3) 64,362 9.40 4,529 64,653 9.46 4,580 (18)Other 1,261 7.29 69 770 6.79 39 -------- ------ -------- ------ Total earning assets $ 74,833 9.00 5,037 $ 77,766 8.94 5,207 -------- ------ -------- ------ -------- -------- FUNDING SOURCES Deposits: (19) Interest-bearing checking $ 1,735 1.41 18 $ 1,847 1.30 18 (20) Market rate and other savings 30,408 2.68 610 32,562 2.59 632 (21) Savings certificates 15,076 5.10 576 15,596 5.10 595 (22) Other time deposits 234 4.79 8 201 4.47 7 (23) Deposits in foreign offices 189 5.03 7 708 5.38 28 -------- ------ -------- ------ (24) Total interest-bearing deposits 47,642 3.42 1,219 50,914 3.36 1,280 Federal funds purchased and securities sold (25) under repurchase agreements 1,895 5.40 76 2,712 5.37 109 (26)Commercial paper and other short-term borrowings 323 5.89 14 264 5.96 12 (27)Senior debt 1,709 6.26 80 1,840 6.33 87 (28)Subordinated debt 2,619 6.96 137 2,808 6.99 147 Guaranteed preferred beneficial interests in (29) Company's subordinated debentures 1,299 7.80 76 1,283 7.82 75 -------- ------ -------- ------ (30) Total interest-bearing liabilities 55,487 3.86 1,602 59,821 3.82 1,710 (31)Portion of noninterest-bearing funding sources 19,346 -- -- 17,945 -- -- -------- ------ -------- ------ (32) Total funding sources $ 74,833 2.87 1,602 $ 77,766 2.94 1,710 -------- ------ -------- ------ -------- -------- NET INTEREST MARGIN AND NET INTEREST INCOME ON (33) A TAXABLE-EQUIVALENT BASIS (4) 6.14 % $3,435 6.00 % $3,497 ---- ------ ---- ------ ---- ------ ---- ------ NONINTEREST-EARNING ASSETS (34)Cash and due from banks $ 6,547 $ 8,293 (35)Goodwill 6,896 7,255 (36)Other 5,294 7,389 -------- -------- Total noninterest-earning assets $ 18,737 $ 22,937 -------- -------- -------- -------- NONINTEREST-BEARING FUNDING SOURCES (37)Deposits $ 22,537 $ 23,932 (38)Other liabilities 2,687 3,588 (39)Preferred stockholders' equity 275 397 (40)Common stockholders' equity 12,584 12,965 Noninterest-bearing funding sources used to (41) fund earning assets (19,346) (17,945) -------- -------- (42) Net noninterest-bearing funding sources $ 18,737 $ 22,937 -------- -------- -------- -------- (43)TOTAL ASSETS $ 93,570 $100,703 -------- -------- -------- -------- ----------------------------------------------------------------------------------------------------------------
(1) The average prime rate of Wells Fargo Bank was 8.50% and 8.42% for the nine months ended September 30, 1998 and 1997, respectively. The average three-month London Interbank Offered Rate (LIBOR) was 5.65% and 5.71% for the same periods, respectively. (2) Yields are based on amortized cost balances. The average amortized cost balances for securities available for sale totaled $8,349 million and $11,973 million for the nine months ended September 30, 1998 and 1997, respectively. (3) Nonaccrual loans and related income are included in their respective loan categories. (4) Includes taxable-equivalent adjustments that primarily relate to income on certain loans and securities that is exempt from federal and applicable state income taxes. The federal statutory tax rate was 35% for the nine months ended September 30, 1998 and 1997. EX-99.2 4 EXHIBIT 99.2 EXHIBIT 99.2 WELLS FARGO & COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CASH FLOWS
- ------------------------------------------------------------------------------------------------- Nine months ended September 30, ------------------------------ (in millions) 1998 1997 - ------------------------------------------------------------------------------------------------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 999 $ 857 Adjustments to reconcile net income to net cash provided by operating activities: Provision for loan losses 510 420 Depreciation and amortization 683 683 Investment securities gains (41) (6) Gains on sales of loans (67) (41) Gains from dispositions of operations (89) (7) Net decrease in accrued interest receivable 5 128 Net increase in accrued interest payable 66 74 Net decrease (increase) in loans originated for sale 174 (75) Other, net (117) 1,227 -------- -------- Net cash provided by operating activities 2,123 3,260 -------- -------- CASH FLOWS FROM INVESTING ACTIVITIES: Securities available for sale: Proceeds from sales 558 275 Proceeds from prepayments and maturities 4,038 3,270 Purchases (2,868) (726) Net (increase) decrease in loans resulting from originations and collections (463) 1,755 Proceeds from sales (including participations) of loans 1,237 158 Purchases (including participations) of loans (97) (210) Proceeds from dispositions of operations 473 8 Proceeds from sales of foreclosed assets 115 116 Net increase in federal funds sold and securities purchased under resale agreements (998) (1) Other, net (151) 54 -------- -------- Net cash provided by investing activities 1,844 4,699 -------- -------- CASH FLOWS FROM FINANCING ACTIVITIES: Net decrease in deposits (2,430) (10,899) Net increase (decrease) in short-term borrowings (1,955) 2,296 Proceeds from issuance of senior debt -- 700 Repayment of senior debt (693) (525) Proceeds from issuance of subordinated debt 250 -- Repayment of subordinated debt (300) (351) Proceeds from issuance of guaranteed preferred beneficial interests in Company's subordinated debentures -- 149 Proceeds from issuance of common stock 87 67 Redemption of preferred stock -- (325) Repurchase of common stock (429) (1,452) Payment of cash dividends on preferred stock (13) (21) Payment of cash dividends on common stock (333) (350) Other, net 218 (1,161) -------- -------- Net cash used by financing activities (5,598) (11,872) -------- -------- NET CHANGE IN CASH AND CASH EQUIVALENTS (DUE FROM BANKS) (1,631) (3,913) Cash and cash equivalents at beginning of period 8,169 11,736 -------- -------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 6,538 $ 7,823 -------- -------- -------- -------- Supplemental disclosures of cash flow information: Cash paid during the period for: Interest $ 1,536 $ 1,636 Income taxes $ 645 $ 558 Noncash investing activities: Transfers from loans to foreclosed assets $ 73 $ 76 - -------------------------------------------------------------------------------------------------
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